SARAJEVO (Reuters) -- Under pressure from protesting veterans of the 1992-95 war, Bosnia's Muslim-Croat Federation parliament has voted against slashing veterans' benefits, despite a savings plan agreed with the IMF and the World Bank.
Several hundred angry war veterans gathered in front of parliament for a second day, protesting against a 10 percent cut in benefits and the abolition of a law granting special benefits to decorated veterans.
The emergency parliament session approved their demands after protesters smashed part of an iron fence dividing them from the parliament building, which was guarded by special police forces in full combat gear.
The veterans also demanded the resignation of Federation Minister for Veterans Zahid Crnkic.
"The essence of our requests is for the parliament to respect legislation it had passed, to respect soldiers," said Dzevad Radzo, a decorated war veteran and protest leader.
The government had refused to meet the veterans' demands.
The federation cabinet is under financial strain because of generous social service benefits granted since the 1992-95 war to veterans and invalids who make up the largest welfare category and account for a large part of the electorate.
Bosnia clinched a 1.2 billion euro ($1.74 billion) standby arrangement with the International Monetary Fund to preserve fiscal stability at a time of economic crisis.
Under the deal, the country's two regions, the Muslim-Croat Federation and the Serb Republic, have promised to cut wages and costs of government employees and budgetary beneficiaries by 10 percent.
The Muslim-Croat federation has been under a special financial strain because of generous benefits granted to veterans and civilian victims of war as an election sweetener in 2006, which account for about 40 percent of its budget.
The World Bank has made conditional a $100 million loan for structural reforms on revision of all beneficiaries who receive payments for their role in the war.
No one from the government was available to comment as the prime minister and finance minister had left for Turkey to attend the annual IMF meeting.